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(1)The validity of an act done by a company shall not be called into question on the ground of lack of capacity by reason of anything in the company’s memorandum.
(2)A member of a company may bring proceedings to restrain the doing of an act which but for subsection (1) would be beyond the company’s capacity; but no such proceedings shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the company.
(3)It remains the duty of the directors to observe any limitations on their powers flowing from the company’s memorandum; and action by the directors which but for subsection (1) would be beyond the company’s capacity may only be ratified by the company by special resolution.
A resolution ratifying such action shall not affect any liability incurred by the directors or any other person; relief from any such liability must be agreed to separately by special resolution.
(4)The operation of this section is restricted by [F2section 65(1) of the Charities Act 1993]] and section 112(3) of the M1Companies Act 1989 in relation to companies which are charities; and section 322A below (invalidity of certain transactions to which directors or their associates are parties) has effect notwithstanding this section.
Textual Amendments
F1Ss. 35, 35A, 35B substituted (4. 2. 1991) for s. 35 (subject to the transitional and savings provisions in S.I. 1990/2569, art. 7) by Companies Act 1989 (c. 40), ss. 108(1), 213(2)
F2Words in s. 35(4) substituted (1.8.1993) by 1993 c. 10, ss. 98(1), 99(1), Sch. 6 para. 20(2)
Modifications etc. (not altering text)
C1S. 35 excluded by Charities Act 1960 (c. 58, SIF 19), s. 30B(1) as substituted (4. 2. 1991) (with transitional and savings provisions in S.I. 1990/2569, art. 7) by Companies Act 1989 (c. 40, SIF 27), ss. 111(1), 213
S. 35 excluded by S.I. 1990/2569, art. 7(1)
S. 35 excluded (S) (4. 2. 1991) by Companies Act 1989 (c. 40, SIF 27), ss. 112(3), 213(2)
C2S. 35 applied with modifications by S.I. 1985/680, regs. 4-6, Sch. as amended (4. 2. 1991) by S.I. 1990/2571, reg. 2(a)(b)
S. 35 excluded (E.W.) (1.8.1993) by 1993 c. 10, ss. 65(1), 99(1)
C3S. 35(3) modified by Charities Act 1960 (c. 58, SIF 19), s. 30(B)(4) as substituted (4. 2. 1991) (subject to the transitional and savings provisions in S.I. 1990/2569, art. 7), by Companies Act 1989 (c. 40, SIF 27), ss. 111(1), 213(2)
S. 35(3) restricted (E.W.) (1.8.1993) by 1993 c. 10, ss. 65(4), 99(1)
Marginal Citations
(1)In favour of a person dealing with a company in good faith, the power of the board of directors to bind the company, or authorise others to do so, shall be deemed to be free of any limitation under the company’s constitution.
(2)For this purpose—
(a)a person “deals with” a company if he is a party to any transaction or other act to which the company is a party;
(b)a person shall not be regarded as acting in bad faith by reason only of his knowing that an act is beyond the powers of the directors under the company’s constitution; and
(c)a person shall be presumed to have acted in good faith unless the contrary is proved.
(3)The references above to limitations on the directors’ powers under the company’s constitution include limitations deriving—
(a)from a resolution of the company in general meeting or a meeting of any class of shareholders, or
(b)from any agreement between the members of the company or of any class of shareholders.
(4)Subsection (1) does not affect any right of a member of the company to bring proceedings to restrain the doing of an act which is beyond the powers of the directors; but no such proceedings shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the company.
(5)Nor does that subsection affect any liability incurred by the directors, or any other person, by reason of the directors’ exceeding their powers.
(6)The operation of this section is restricted by [F4section 65(1) of the Charities Act 1993] and section 112(3) of the Companies Act 1989 in relation to companies which are charities; and section 322A below (invalidity of certain transactions to which directors or their associates are parties) has effect notwithstanding this section.]
Textual Amendments
F3Ss. 35, 35A, 35B substituted (4.2.1991) for s. 35 (subject to the transitional and savings provisions in S.I. 1990/2569, art. 7) by Companies Act 1989 (c. 40, SIF 27), ss. 108(1), 213(2)
F4Words in s. 35A(6) substituted (1.8.1993) by 1993 c. 10, ss. 98(1), 99(1), Sch. 6 para. 20(2)
Modifications etc. (not altering text)
C4S. 35A excluded by Charities Act 1960 (c. 58, SIF 19), s. 30B(1) as substituted (4.2.1991) (subject to the transitional and savings provisions in S.I. 1990/2569, art. 7) by Companies Act 1989 (c.40, SIF 27), ss. 111(1), 213(2)
C5S. 35A excluded (S.) (4.2.1992) by Companies Act 1989 (c. 40, SIF 27), ss. 112(3), 213(2)
C6S. 35A excluded by S.I. 1990/2569, art. 7(2)
C7S. 35A applied with modifications by S.I. 1985/680, arts. 4–6, Sch. as amended (4.2.1991) by S.I. 1990/2571, reg. 2(a)(b)
S. 35A excluded (E.W.) (1.8.1993) by 1993 c. 10, ss. 65(1), 99(1)
A party to a transaction with a company is not bound to enquire as to whether it is permitted by the company’s memorandum or as to any limitation on the powers of the board of directors to bind the company or authorise others to do so.]
Textual Amendments
F5Ss. 35, 35A, 35B substituted (4.2.1991) for s. 35 (subject to the transitional and savings provisions in S.I. 1990/2569, art. 7) by Companies Act 1989 (c. 40, SIF 27), ss. 108(1), 213(2)
Modifications etc. (not altering text)
C8S. 35B applied with modifications by S.I. 1985/680, arts. 4–6, Sch. as amended (4.2.1991) by S.I. 1990/2571, reg. 2(a)(b)
S. 35B applied (with modifications) by S.S.I. 2001/128, reg. 3, Sch. 1
Under the law of England and Wales a contract may be made—
(a)by a company, by writing under its common seal, or
(b)on behalf of a company, by any person acting under its authority, express or implied;
and any formalities required by law in the case of a contract made by an individual also apply, unless a contrary intention appears, to a contract made by or on behalf of a company.]
Textual Amendments
F6S. 36 substituted by Companies Act 1989 (c. 40, SIF 27), ss. 130(1), 213(2)
Modifications etc. (not altering text)
C9S. 36: power to apply conferred by Companies Act 1989 (c. 40, SIF 27), ss. 130(6), 213(2)
C10Ss. 36-36C applied (with modifications) (16.5.1994) by S.I. 1994/950, regs. 2-6
S. 36 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
(1)Under the law of England and Wales the following provisions have effect with respect to the execution of documents by a company.
(2)A document is executed by a company by the affixing of its common seal.
(3)A company need not have a common seal, however, and the following subsections apply whether it does or not.
(4)A document signed by a director and the secretary of a company, or by two directors of a company, and expressed (in whatever form of words) to be executed by the company has the same effect as if executed under the common seal of the company.
[F8(4A)Where a document is to be signed by a person as a director or the secretary of more than one company, it shall not be taken to be duly signed by that person for the purposes of subsection (4) unless the person signs it separately in each capacity.]
(5)[F9A document executed by a company which makes it clear on its face that it is intended by the person or persons making it to be a deed has effect, upon delivery, as a deed; and it shall be presumed, unless a contrary intention is proved, to be delivered upon its being so executed.]
(6)In favour of a purchaser a document shall be deemed to have been duly executed by a company if it purports to be signed by a director and the secretary of the company, or by two directors of the company, or by two directors of the company, [F10and, where it makes it clear on its face that it is intended by the person or persons making it to be a deed, to have been delivered upon its being executed] .
A “purchaser” means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property.]
[F11(7)This section applies in the case of a document which is (or purports to be) executed by a company in the name or on behalf of another person whether or not that person is also a company.]
[F12(8)For the purposes of this section, a document is (or purports to be) signed, in the case of a director or the secretary of a company which is not an individual, if it is (or purports to be) signed by an individual authorised by the director or secretary to sign on its behalf.]
Textual Amendments
F7S. 36A inserted by Companies Act 1989 (c. 40, SIF 27), ss. 130(2), 213(2)
F8S. 36(4A) inserted (E.W.) (15.9.2005) by The Regulatory Reform (Execution of Deeds and Documents) Order 2005 (S.I. 2005/1906), art. 10(1), Sch. 1 para. 10
F9S. 36A(5) repealed (E.W.) (15.9.2005) by The Regulatory Reform (Execution of Deeds and Documents) Order 2005 (S.I. 2005/1906), art. 10(2), Sch. 2
F10Words in s. 36A(6) repealed (E.W.) (15.9.2005) by The Regulatory Reform (Execution of Deeds and Documents) Order 2005 (S.I. 2005/1906), arts. 5, 10(2), Sch. 2
F11S. 36A(7) inserted (E.W.) (15.9.2005) by The Regulatory Reform (Execution of Deeds and Documents) Order 2005 (S.I. 2005/1906), art. 7(2)
F12S. 36A(8) inserted (E.W.) (15.9.2005) by The Regulatory Reform (Execution of Deeds and Documents) Order 2005 (S.I. 2005/1906), art. 10(1), Sch. 1 para. 11
Modifications etc. (not altering text)
C11S. 36A: power to apply conferred by Companies Act 1989 (c. 40, SIF 27), ss. 130(6), 213(2)
C12S. 36A applied with modifications by S.I. 1985/680, arts. 4–6, Sch. as amended by S.I. 1990/1394, reg. 2
C13S. 36A applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
C14Ss. 36-36C applied (with modifications) (16.5.1994) by S.I. 1994/950, regs. 2-6
C15S. 36A(6) modified (13.10.2003) by Land Registration Act 2002 (c. 9), ss. 91(9), 136(2) (with s. 129); S.I. 2003/1725, art. 2(1)
(1)A document is validly executed by a company as a deed for the purposes of section 1(2)(b) of the Law of Property (Miscellaneous Provisions) Act 1989, if and only if—
(a)it is duly executed by the company, and
(b)it is delivered as a deed.
(2)A document shall be presumed to be delivered for the purposes of subsection (1)(b) upon its being executed, unless a contrary intention is proved.
(1)Notwithstanding the provisions of any enactment, a company need not have a company seal.
(2)For the purposes of any enactment—
(a)providing for a document to be executed by a company by affixing its common seal; or
(b)referring (in whatever terms) to a document so executed,
a document signed or subscribed by or on behalf of the company in accordance with the provisions of the Requirements of Writing (Scotland) Act 1995 shall have effect as if so executed.
(3)In this section “enactment” includes an enactment contained in a statutory instrument.]
Textual Amendments
F13S. 36B substituted (S.) (1.8.1995) by 1995 c. 7, ss. 14(1), 15(2), Sch. 4 para. 51 (with ss. 9(3)(5)(7), 13, 14(3))
Modifications etc. (not altering text)
C16S. 36B applied (with modifications) (S.) (6.4.2001) by S.S.I. 2001/128, reg. 3, Sch. 1
C17S. 36B(2) applied (6.4.2006) by The Energy Administration (Scotland) Rules 2006 (S.I. 2006/772), rule 67(2) (with rule 67(3))
(1)A contract which purports to be made by or on behalf of a company at a time when the company has not been formed has effect, subject to any agreement to the contrary, as one made with the person purporting to act for the company or as agent for it, and he is personally liable on the contract accordingly.
(2)Subsection (1) applies—
(a)to the making of a deed under the law of England and Wales, and
(b)to the undertaking of an obligation under the law of Scotland,
as it applies to the making of a contract.]
Textual Amendments
F14S. 36C inserted by Companies Act 1989 (c. 40, SIF 27), ss. 130(4), 213(2)
Modifications etc. (not altering text)
C18S. 36C: power to apply conferred by Companies Act 1989 (c. 40, SIF 27), ss. 130(6), 213(2)
C19S. 36C applied with modifications by S.I. 1985/680, arts. 4–6, Sch. (as amended by S.I. 1990/1394, reg. 2)
C20Ss. 36-36C applied (with modifications) (16.5.1994) by S.I. 1994/950, regs. 2-6
S. 36C applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
A bill of exchange or promissory note is deemed to have been made, accepted or endorsed on behalf of a company if made, accepted or endorsed in the name of, or by or on behalf or on account of, the company by a person acting under its authority.
Modifications etc. (not altering text)
C21S. 37 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
(1)A company may . . . F15, by writing under its common seal, empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds on its behalf in any place elsewhere than in the United Kingdom.
[F16(2)A deed executed by such an attorney on behalf of the company has the same effect as if it were executed under the company’s common seal.]
[F17(3)This section does not extend to Scotland.]
Textual Amendments
F15Words inserted by Companies Act 1989 (c. 40, SIF 27), ss. 130(7), 213(2), Sch. 17 para. 1(2) and repealed by Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c. 40, SIF 27), s. 74(1)(2), Sch. 8 para. 33(2),Sch. 9
F16S. 38(2) substituted by Companies Act 1989 (c. 40, SIF 27), ss. 130(7), 213(2), Sch. 17 para. 1(3)
F17S. 38(3) added (S.) (1.8.1995) by 1995 c. 7, ss. 14(1), 15(2), Sch. 4 para. 52 (with ss. 9(3)(5)(7), 13, 14(3))
Modifications etc. (not altering text)
C22S. 38 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
(1)A company [F18which has a common seal] whose objects require or comprise the transaction of business in foreign countries may, if authorised by its articles, have for use in any territory, district or place elsewhere than in the United Kingdom, an official seal, which shall be a facsimile of [F19its common seal], with the addition on its face of the name of every territory, district or place where it is to be used.
[F20(2)The official seal when duly affixed to a document has the same effect as the company’s common seal.]
[F21(2A)Subsection (2) does not extend to Scotland.]
(3)A company having an official seal for use in any such territory, district or place may, by writing under its common seal [F22or as respects Scotland by writing subscribed in accordance with the Requirements of Writing (Scotland) Act 1995] . . . F23, authorise any person appointed for the purpose in that territory, district or place to affix the official seal to any deed or other document to which the company is party in that territory, district or place.
(4)As between the company and a person dealing with such an agent, the agent’s authority continues during the period (if any) mentioned in the instrument conferring the authority, or if no period is there mentioned, then until notice of the revocation or determination of the agent’s authority has been given to the person dealing with him.
(5)The person affixing the official seal shall certify in writing on the deed or other instrument to which the seal is affixed the date on which and the place at which it is affixed.
Textual Amendments
F18Words inserted by Companies Act 1989 (c. 40, SIF 27), ss. 130(7), 213(2), Sch. 17 para. 2(2)
F19Words substituted by Companies Act 1989 (c. 40, SIF 27), ss. 130(7), 213(2), Sch. 17 para. 2(2)
F20S. 39(2) substituted by Companies Act 1989 (c. 40, SIF 27), ss. 130(7), 213(2), Sch. 17 para. 2(3)
F21S. 39(2A) inserted (1.8.1995) by 1995 c. 7, ss. 14(1), 15(2), Sch. 4 para. 53(a) (with ss. 9(3)(5)(7), 13, 14(3))
F22Words in s. 39(3) inserted (S.) (1.8.1995) by 1995 c. 7, ss. 14(1), 15(2), Sch. 4 para. 53(b) (with ss. 9(3)(5)(7), 13, 14(3))(with ss. 9(3)(5)(7), 13, 14(3))
F23Words inserted by Companies Act 1989 (c. 40, SIF 27), ss. 130(7), 213(2), Sch. 17 para. 2(4) and repealed by Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c. 40, SIF 27), s. 74(1)(2), Sch. 8 para. 33(3), Sch. 9
Modifications etc. (not altering text)
C23S. 39 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
(1)A company [F25which has a common seal] may have, for use for sealing securities issued by the company and for sealing documents creating or evidencing securities so issued, an official seal which is a facsimile of [F26its common seal] with the addition on its face of the word “Securities”. [F27The official seal when duly affixed to a document has the same effect as the company’s common seal.]]
[F28(2)Nothing in this section shall affect the right of a company registered in Scotland to subscribe such securities and documents in accordance with the Requirements of Writing (Scotland) Act 1995.]
Textual Amendments
F24S. 40 renumbered as s. 40(1) (1.8.1995) by 1995 c. 7, ss. 14(1), 15(2), Sch. 4 para. 54 (with ss. 9(3)(5)(7), 13, 14(3))
F25Words inserted by Companies Act 1989 (c. 40, SIF 27), ss. 130(7), 213(2), Sch. 17 para. 3(2)
F26Words substituted by Companies Act 1989 (c. 40, SIF 27), ss. 130(7), 213(2), Sch. 17 para. 3(2)
F27Words inserted by Companies Act 1989 (c. 40, SIF 27), ss. 130(7), 213(2), Sch. 17 para. 3(3)
F28S. 40(2) added (1.8.1995) by 1995 c. 7, ss. 14(1), 15(2), Sch. 4 para. 54 (with ss. 9(3)(5)(7), 13, 14(3))
Modifications etc. (not altering text)
C24S. 40 applied with modifications by S.I. 1985/680, regs. 4–6, Sch.
A document or proceeding requiring authentication by a company [F29is sufficiently authenticated for the purposes of the law of England and Wales by the signature of a director, secretary or other authorised officer of the company.]
Textual Amendments
F29Words substituted by Companies Act 1989 (c. 40, SIF 27), ss. 130(7), 213(2), Sch. 17 para. 4
Modifications etc. (not altering text)
C25S. 41 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F30S. 42 repealed (1.1.2007) by Companies Act 2006 (c. 46), ss. 1295, 1300, Sch. 16; S.I. 2006/3428, art. 7(a), Sch. 2 Pt. 1 (with arts. 6, 8, Sch. 5) (as amended by S.I. 2007/3495, art. 11, Sch. 5))
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